Patients Get Stuck With The Bill When Insurers Say They Will Pay, Then Change Their Mind

By Consumers For Quality Care, on February 12, 2020

A new report by Kaiser Health News details a disturbing practice among some insurers that can leave consumers responsible for huge bills that they thought would be paid for.

As the report details, many consumers are experiencing what is known as “retrospective denial,” where an insurer initially says they will pay for a medical expense, but then decides after the fact that it was not medically necessary and refuses to pay.

One couple, Darla and Andy Markley, were saddled with huge bills after Darla came down with a rare and unexpected illness. Before getting several tests at a Mayo Clinic in Minnesota, the Markley’s insurance sent them a letter preapproving coverage for them. But after the tests, it was a different story.

Darla Markley, 53, said her insurer had sent her a letter preapproving her to have a battery of tests at the Mayo Clinic in neighboring Minnesota after she came down with transverse myelitis, a rare, paralyzing illness that had kept her hospitalized for over a month. But after the tests found she also had beriberi, a vitamin deficiency, Anthem Blue Cross and Blue Shield judged that the tests weren’t needed after all and refused to pay — although Markley said she and Mayo had gotten approval.

Even though Anthem Blue Cross and Blue Shield had said they would cover the tests, they changed their mind after the fact, and the Markley’s were stuck with $34,000 in medical bills. Eventually, the couple was forced to declare bankruptcy.

The situation the Markley’s found themselves in is known as “retrospective denial.” The practice has been getting more attention recently as it has become more common. Even with a prior authorization for treatment, insurers will often include a line saying that the prior authorization is “not a guarantee of payment.”

Martha Gaines, director of the Center for Patient Partnerships at the University of Wisconsin Law School, said the practice reveals that the insurance industry is too focused on profits instead of patient care.

“How broken can you get?” she asked. “How much more laid bare can it be that our health care insurance system is not about health, nor caring, but just for profit?”

Unfortunately, the problem appears to be getting worse. A recent American Medical Association survey found that 88 percent of providers reported that the burden of prior authorization has increased over the past five years.